Further to our exclusive coverage of the launch of new FX and CFDs broker ChampionFX by former ThinkMarkets GM Athol Nourse and its plans to be involved in an ICO, Mr. Nourse’s partner in the venture – binary options broker Binary.com – has indeed released its ICO document, in which it confirms its co-ownership of ChampionFX and details plans to “ICO” the company.
Most importantly, the Binary.com ICO document – similar in many respects to an IPO prospectus – provides us with a rare and interesting glimpse into the inner workings of a Binary Options broker.
But first, some background on the planned ICO.
Jean-Yves Sireau, Binary.com
Binary.com is owned (81%) by founder and CEO Jean-Yves Sireau, a French national who now resides in Hong Kong. The company is one of the oldest Binary Options brokers, originally operating the xodds.com and betonmarkets.com websites as far back as 2000. The company’s various brands have since been consolidated under the binary.com label.
Unlike most binary options brokers, Binary.com hols various gaming and financial licenses in various jurisdictions, including Malta, the UK, Japan, Isle of Man, and Vanuatu.
The planned ICO will see the company sell a number of Binary.com Tokens – which under certain circumstances can be converted one-for-one into “real” company shares, and which in the interim will also receive dividends similar to the common stock – representing about 5% ownership of the company. The company plans to list the Tokens on the Lykke.com cryptocurrency exchange.
Whether Binary.com is successful or not in ICO’ing the company remains to be seen. However the interesting points from the document, as we stated above, are the peeks we get into the financials of a Binary Options broker.
Revenues by Geography
The most interesting point we noted from the ICO document was the detailing of where the company earns its Revenues. Clearly, the “big money” in Binary Options is in Asia.
Without specifically targeting the Far East any more than other areas of the world, Binary.com sees about 65% of its what it calls Contract Sales Revenue (i.e. the value of binary bets placed) in Asia, much of that in China.
One of Binary.com’s fastest growing regions has been Russia and other Russian speaking European countries, where the value of bets placed in the first six months of 2017 ($37.9 million) nearly doubled all of 2016 ($21.8 million).
Profitability
Those $458.6 million in bets placed cost Binary.com $445.7 million in payouts to clients during the first six months of 2017. Meaning, that after some other Revenues from its newly launched MT5 product trading, Binary.com had “real” Revenues of $13.1 million in 1H-2017 (what they call Gross Profit in the income statement below).
After deducting selling and admin expenses (Binary.com has 109 employees, of which 13 are directors), and several other accounting adjustments, Binary.com made $10.3 million in profit in the first six months of 2017. A pretty good result, given that they earned $13.9 million in all of 2016. And, given that some of the company’s Binary Options competitors are having a tough time of it lately, as regulators around the world are cracking down on the sector.
The company reported having 55,388 active trading clients during the first half of 2017.
The company’s full ICO document can be downloaded from the binary.com website for those eligible.